BLS Reports Net Negative Inflation for 5 Months: Anyone Believe That?

Today the BLS reported the CPI was flat. The Econoday consensus was for a 0.1% rise.

Over the last five months, the CPI is -0.1%. Over the last four months, the CPI is -0.2%.

In what is one of the very weakest 4-month stretch in 60 years of records, core consumer prices could manage only a 0.1 percent increase in June. This is the third straight 0.1 percent showing for the core (ex food & energy) that was preceded by the very rare 0.1 percent decline in March. Total prices were unchanged in the month with food neutral and energy down 1.6 percent.

Housing, which is a central category, continues to moderate, also coming in at 0.1 percent following a 0.2 percent gain in May. Apparel is down for a fourth month in a row with transportation, reflecting falling vehicle prices, down for a second month. Medical care, which had been moderating, picked up with a 0.4 percent gain while prescription drugs which Janet Yellen has been citing for special weakness, bounced back with a 1.0 percent gain. However wireless telephone services, another area cited by Yellen for weakness, posted another sizable decline, down 0.8 percent in June.

Year-on-year, the core is steady at 1.7 percent with total prices, which fluctuate much more than the core, down 3 tenths to 1.6 percent. The Fed may be blaming this stretch of weakness on special factors, but that argument is losing force.

CPI June 2016 – June 2017

Percent Changes by Category

BLS Figures

• All Items: Down -0.1% Net for last 5 months
• Core CPI: Up net 0.2% over last 4 months
• Fuel Oil: Down 5 consecutive months
• Commodities excluding food and energy: Down 4 consecutive months
• New Vehicles: Down 5 consecutive months
• Used Vehicles: Down 6 consecutive months
• Apparel: Down 4 consecutive months

Supposedly medical care services are up only 0.3% over the last four months. Medical care commodities are up a net 0.3% over the last five months.

Your results may vary.

Mike “Mish” Shedlock